Friday's action was. . hairy (tops, bottoms and otherwise), to say the least. See my alter ego Homer's expression on the right of the blog for a more precise reflection of today's whipsaw.Despite the wild gyrations every day this week the Qs closed down only 7 cents for the week. This, opposed to the DIA (down 1.87 or 1.7%), SPY (down 2.44 or 1.9%) and the amazing IWM (up .95 or 1.4%). Can a bottom be far behind with this type of divergence?
An increasing number of technical bloggers have made the case for an impending bounce and today's action sure felt like a one day reversal pattern in the making, but cooler heads prevailed in the closing hour and the risk avoidance selloff took the Qs right down to S1 at the close, only .20 below the open. Better safe than sorry. (see Market Wisdom on right blog panel).
While the XLF 3LRs study flashed a BUY at $ 18.35 mid morning, the Qs still look technically vulnerable and poised for another leg down. With earnings in mid run and "disappointment" the current buzzword, I'm inclined to play next week lightly.
At one point the VIX was up 15% on the day, and typically those big surges get played off for a day or two before a blow off.
Monday might be an important turning point if we do get a redux of today's dynamics.
We're seeing interesting support in both the A50 and A200, with both indicators reflecting the neutral outcome for the Qs this week. Little insight to gain from these charts other than oversold levels have now been absorbed and the contrarian uber oversold argument for a bounce has lost its edge.
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